Aspen Insurance to post fourth-quarter loss

Aspen Insurance Holdings Ltd. on Monday said it expects to post a fourth-quarter underwriting loss of roughly $30 million.

Following a review by Hamilton, Bermuda-based Aspen’s insurance leadership team, which sought to improve the loss ratio and reduce volatility in Aspen Insurance’s underwriting performance, the company said in a statement that “it significantly reduced its appetite for programs business and primary casualty.”

The review also resulted in a restructure of Aspen’s ceded reinsurance arrangements, Aspen said, which is expected to reduce volatility and, over time, benefit the expense ratio. Aspen also purchased some runoff reinsurance in the fourth quarter.

Aspen said the reinsurance segment is expected to record about $10 million in underwriting income in the fourth quarter, reflecting an increase of roughly $15 million in catastrophe losses and an increase of about $25 million in energy and property-related losses, compared with the fourth quarter of 2015, and one-time commission-related adjustments of about $10 million in the fourth quarter of 2016.

In total, the group expects a loss ratio of about 63% and an expense ratio of about 44% in the fourth quarter of 2016, according to the statement.

“Our new insurance leadership team has conducted a thorough review of our insurance portfolio and identified the best opportunities for long-term profitable growth,” Chris O’Kane, Group CEO, said in a statement. “We expect to see continuing good performance and increased growth in areas such as professional lines, U.K. property and casualty, crisis management, and surety.”

Mr. O’Kane said Aspen has “exited lines where the level of volatility is too high and where the returns are not expected to meet our requirements.”

Aspen said financial markets were affected by movements in the yield curve in the fourth quarter of 2016. As a result, the adverse mark-to-market impact on Aspen’s investment portfolio was about $190 million. Aspen said it expects to record a diluted book value per share of about $46.70 as at December 31, 2016. 

Aspen will release its full fourth-quarter 2016 financial results on Feb. 8.